CuttingEdge: Equipment Rentals Trending Up

Reports also forecast remodeling, new-home sales improvements

Despite the continuing economic uncertainty affecting the housing and construction industries, not all of the news is bad. Three recent high-level studies are seeing early signs of recovery and forecasting growth for the months ahead, with residential building and remodeling picking up steam as we move into 2011.

In one of the studies, a midyear report prepared for the American Rental Association, indicators show that spending on tool and equipment rentals – considered a bellwether of construction industry health – is beginning to grow and is "leading the way in the construction space," says ARA chief executive Christine Wehrman. Thanks to federal stimulus money and pent-up consumer demand, "the equipment rental industry is poised to gain strength in Q3 and Q4, with improvement in all categories forecasted for 2011," Wehrman says.

Another upbeat report, by Harvard University's Joint Center for Housing Studies, sees remodeling growth through the end of this year helping to fuel a turnaround in overall construction spending early next year. "A recovery in home-improvement spending will soon be under way," the report announces, with "growth accelerating to the double-digit range in the first quarter of 2011." Although the report notes that its forecast depends on continuing economic progress "absent a reversal," the recovery in home-improvement activity "appears to be moving beyond simple replacement projects and energy retrofits to broader remodels and upgrades," says Kermit Baker, director of the organization's Remodeling Futures Program.

Finally, no less an authority than NAHB stated in July that "residential construction will slowly improve throughout the second half of this year and into next year, bolstered by continued low mortgage rates, affordable housing prices and an improving jobs market." The association also noted that the total inventory of new homes for sale was at its lowest point in more than 40 years, providing ample opportunity for construction growth as the economy improves – and that many areas of the country were already seeing strong growth in new-home sales.

Of course, all of these rosy predictions are dependent on an economy that continues to grow at an acceptable pace. But the organizations issuing the reports are all known for their forecasting ability – so if they see improvement ahead, it may be worth paying attention and getting our tools ready for action, just in case they're right.